Report Sees Evidence of Increasing Steel Prices

June 30, 2009
After 11 months, U.S. steelmakers seeing some improvements

The latest steel pricing survey by MEPS International Ltd. indicates the first rise in steel prices since July 2008, and speculates that ”the recent dire market conditions appear to have bottomed and expectations are for a steady, albeit slow, recovery.”

MEPS is a London-based consulting group that focuses on steel markets.

The report points to rising capacity utilization rates for U.S. steel mills, which have inched up over 47.5% in the past month. Service center activity appears to have reached a point where inventories match demand, and import license applications are in an overall decline.

The price increase announced by AK Steel Corp. on June 18, covering carbon and stainless flat-rolled products, to be effective with July new orders, is being picked up by other producers, MEPS reports.

However, MEPS indicates that Canadian transaction values continue to decline and the rising strength of the Canadian dollar versus the U.S. dollar is making it possible for U.S. producers to sell into the neighboring country. (Offshore imports are a virtual non-factor, according to the report.)

Elsewhere in the world, MEPS sees a positive trend for Chinese flat-rolled steel prices, supported by increasing demand and traders rebuilding inventories in advance of new prices increases.

Weak demand is still holding down Japanese and South Korean steel prices, MEPS finds, while Taiwanese demand shows some evidence of a slow recovery.

Eastern European steelmakers (in Poland, Czech Republic, and Slovakia) indicate prices continue to decline, while in Western Europe consumption remains weak. ”However, buyers are coming back to the market,” MEPS reports, ”albeit only for relatively small quantities to replenish their dwindling stocks.” Buyers in Western Europe are resisting price increases, it says, and the weakening U.S. dollar is making imported steel more competitive in the EU. Order levels remain low, though, because European purchasing executives lack the confidence to place high-volume order in view of long lead-times and weak consumption data.

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